In the Matter Of Regulated Debtor's Estate Of Ronnie Bensimon

[2020] FCCA 596

FEDERAL CIRCUIT COURT OF AUSTRALIA

IN THE MATTER OF REGULATED DEBTOR’S ESTATE OF RONNIE BENSIMON [2020] FCCA 596

Catchwords:
BANKRUPTCY – Application by bankrupt to travel overseas – Application opposed by Trustee in Bankruptcy – consideration of relevant matters – Application dismissed.   

Legislation:

Bankruptcy Act 1966 (Cth), ss.77, 80, 81, 272.

Cases cited:

Miao v Mitchell [2015] FCA 22

Re Tyndall, Ex parte Official Receiver (1977) 17 ALR 182

Applicant: RONNIE BENSIMON

Respondent: GESS MICHAEL RAMBALDI AND ANDREW REGINALD YEO AS JOINT AND SEVERAL TRUSTEES OF THE REGULATED ESTATE OF RONNIE BENSIMON, A BANKRUPT

File Number: MLG 424 of 2020

Judgment of: Judge Burchardt

Hearing date: 10 March 2020

Date of Last Submission: 10 March 2020

Delivered at: Melbourne

Delivered on: 13 March 2020

REPRESENTATION

Counsel for the Applicant: Mr Colman

Solicitors for the Applicant: JPM Law

Counsel for the Respondent:

Mr Maiden QC with Mr Silver on 10 March 2020

Mr Silver on 13 March 2020

Solicitors for the Respondent: MST Lawyers

ORDERS

1. Application dismissed.

2. The Applicant pay the Respondent’s costs of this Application.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 424 of 2020

RONNIE BENSIMON

Applicant

And

GESS MICHAEL RAMBALDI AND ANDREW REGINALD YEO AS JOINT AND SEVERAL TRUSTEES OF THE REGULATED ESTATE OF RONNIE BENSIMON, A BANKRUPT

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

1. These reasons for judgment will be transcribed and edited within the limited permissible limits and forwarded to the parties as soon as possible.  You should be aware that, given the inordinate strains of administrative work that my chambers will be under, that may take a bit of time.  Secondly, where I refer to evidence, I am referring to my records, as it were, taken from my notes.  It is, obviously, not a transcript, but it records what I took from the evidence given.

2. The issue in this matter can be shortly stated.  Ronnie Bensimon, who is bankrupt, wants to travel overseas.  The trustee in bankruptcy does not agree.  As a starting point, it should be noted that the Bankruptcy Act 1966 (Cth) (“the Act”) qualifies what Australians would regard as an entitlement to travel overseas if they want to. Section 77 of the Act requires the bankrupt to surrender their passport to the trustee. Section 272 provides that an undischarged bankrupt can only travel overseas if the trustee consents. Nonetheless, it is a serious, not an everyday matter, for the trustee to prohibit travel. In this regard, I refer to the remarks of Deane J in Re Tyndall, Ex parte Official Receiver (1977) 17 ALR 182 at 187 and 190-191, which are set out in the applicant’s written submissions. I bear those remarks well in mind, although I note His Honour’s remarks long predated the affairs of Ms Skase which caused such eruption in Australian public life.

3. The principles in applications like this are well encapsulated, in my respectful view, of the judgment of Beach J in Miao v Mitchell (2015) FCA 22 at [31], where His Honour said:

   The wording of 178 is such as to confer upon the Court the widest possible discretion as to the appropriate order which should be made in the particular case.  It is not necessary, for example, to show that the trustee’s decision was unreasonable, absurd or made with an absence of good faith.  Indeed, it is not necessary to show that the trustee has done anything wrong as such.  The trustee’s decision may on the material before him have been quite correct and reasonable, yet the Court has a wide-ranging supervisory jurisdiction on the material before it to substitute its own decision if appropriate.

4. His Honour then cites authority.  The parties in this matter agree as to what the issues are.  They are encapsulated in exactly the same form in the applicant’s written submissions at paragraph 24 and the respondent’s written submissions at paragraph 6.  First, is the proposed travel genuine?  Second, is the bankrupt likely to return to Australia if permitted to travel overseas?  And, third, will the travel hamper the administration of the bankrupt’s estate? 

5. I turn to the first question, is the proposed travel genuine.  I note that in written submissions the parties have referred to a visit, but the bankrupt’s desire to travel is not limited to a single destination or, indeed, destinations.  The bankrupt says he wants to travel for genuine and legitimate reasons and the submissions refer to paragraphs 41 to 48 of his affidavit.  I will read paragraphs 41 to 43:

   41. In light of the matters outlined above, I expected to be discharged from bankruptcy in July 2019.  As a result, I made arrangements for my wife, children and I to travel to Dubai and the USA at the end of December 2019 in order to explore business opportunities for Bensimon Online Pty Ltd (Company), the jewellery business owned and operated by Kate.  Kate has had to explore expanding the Company to overseas markets as a result of my reputation in Australia, as the primary sales person of the Company, being irretrievably damaged by reason of my bankruptcy and adverse media reporting.  Further, my family and I have been subject to threatening behaviour which has resulted in the need to move house.  In short, my family and I have decided to relocate overseas and seek to start afresh.  My wife recently sold her interests in Kate & Co (Australia) Pty Ltd, and those proceeds are to be used to fund our relocation. 

   42. In the jewellery business, there is strong need to travel frequently, as face to face meetings with clients is important to secure sales. 

   43. My role with the company is sales, being stone purchases and sales, and coordinating ring design.  This encompasses attending jewellery exhibitions, meeting suppliers to view diamonds and jewellery that I would then on recommend to the Company’s clients.  There is no other way to view high value items like this other than attending jewellery exhibitions.  I have therefore been significantly disadvantaged, by reason of my bankruptcy, in performing my sales role properly, which has limited my professional growth prospects, due to my inability to travel.  The major trade shows in the jewellery trade are based in Hong Kong, Las Vegas, Italy, and Dubai, and many smaller shows in other regions. 

6. It should be noted that the business for which the bankrupt says he is an employee has made significant profits during the bankruptcy, which are the subject of dispute with the trustee, who says they were really earned by the bankrupt. 

7. The respondent submits that the applicant is in fact applying to emigrate.  That submission is correct.  What the bankrupt has said is, “My family and I have decided to relocate overseas and start afresh.”  The respondent also says there is no need to travel, because the business is an online business.  Mr Bensimon was cross-examined about this.  At one point he appeared to concede the proposed business – and I note again it is said to be his wife’s – in Dubai and the United States would be online with no bricks and mortar.  He then appeared somewhat to resile from that admission.  He asserted that his wife could go to trade shows.  She has a different role.  It is not as important as what he does.

8. The bankrupt said his wife employs him on the basis she needs his skills.  He did, however, concede that he could be replaced by someone else with the same expertise, but pointed out, reasonably enough, in my view that they are, after all, married with young children to look after together.  They have not definitely, as yet, decided which country they wish to live in, because it is too early to say. 

9. At Court Book 165, in correspondence from the applicant’s solicitors, the following points were made.  The companies are both online businesses.  The companies did not operate from a bricks and mortar store.  I note that the bankrupt has not asked to go to any trade fairs between 2016 to 2019.  He has made one request to go to Italy to see a client, as emerged during cross-examination.  When it was put to the bankrupt that there was no need to live overseas for the business, Mr Bensimon’s answer was, in my view, non-responsive and evasive.

10. To conclude on this first point, the bankrupt says he needs to move on with his life.  There are unproven allegations which have had a considerable impact on his life.  But the evidence for the need to move to Sydney is sparse.  The business appears to be online.  The need to travel to trade fairs as proposed is questionable. I note that his wife is not herself on affidavit.  No definitive conclusion on this aspect of the matter can be made.  This is, of course, an interim hearing in its character.

11. On the one hand, the bankrupt’s position is internally consistent and put on oath.  But, on the other hand, there are objective considerations that throw considerable doubt on his intentions. 

12. The second issue is will the bankrupt return?  He says he will.  If one looks at his affidavit at paragraph 49 at court book 13, what he says is:

    49. I have spent my entire adult life living in Australia.  My parents and two (2) sisters live in Australia.  If the Court grants me permission to travel to the United States of America and Dubai for work purposes, I intend on returning to Australia at least once every three (3) months.  I do not believe I am a risk of not returning to Australia to avoid the obligations imposed upon me as part of my bankruptcy. 

13. He has proffered three undertakings.  Two are in paragraph 28 of the applicant’s written submissions, which I will read out:

    28. Moreover, the applicant is prepared to give undertakings to the Court:

    a. to return to Australia within seven (7) days if the Inspector General:

    i. declines to review the contribution assessments made by the respondent pursuant to section 129W(1) of the Act for the periods 25 July 2016 to 24 July 2017 (in the amount of $37,432.88), 25 July 2017 to 24 July 2018 (in the amount of $249,204.310; and 25 July 2018 to 24 July 2019 (in the amount of $203,210.81) (collectively the contribution assessments); or

    ii. confirms the contribution assessments,

    and, as soon as practicable thereafter, return his passport to the respondent;  and

    b. until such time that the Applicant is discharged from bankruptcy, the Applicant will return to Australia at least every ninety (90) days. 

14. The third undertaking proffered to the court by counsel is that the applicant will instruct his solicitor to accept service while he is outside Australia.  In evidence, Mr Bensimon confirmed his parents and two sisters live in Australia.  He conceded owing $1 million or thereabouts to one of his sisters, scarcely, one might feel, a thing likely to promote tremendous sibling harmony.  He said in his evidence, however, that, “There’s absolutely no way I’m not coming back.  This is the country where I live.  I’m aware of the consequences of not returning.”

15. He also referred to his parents being elderly.  But this is not in fact quite what he says in his affidavit sworn on 6 February 2020.  I refer again to paragraph 41 of that affidavit.  What he said was:

    41. In short, my family and I have decided to relocate overseas and seek to start afresh.

16. In paragraph 39, paragraphs (b) and (c), he said:

    39b. My business reputation in Australia has been irretrievably damaged by reason of my bankruptcy and adverse media reporting such that I have decided to relocate with my family and seek to start afresh my vocation in the jewellery trade;

    39c. My wife recently sold her interest in Kate & Co (Australia) Pty Ltd and those proceeds were to be used to fund the relocation of me and my family.

17. Furthermore, Mr Bensimon’s wife swore an affidavit on 31 January 2019.  The affidavit is at Court Book 1301 and following.  But on page 1302 Ms Bensimon deposed as follows:

    My parents reside in Tasmania.  Ron’s mother is 70 years old and physically unable to care for the children and Ron is estranged from his father. 

18. The bankrupt has not gone on affidavit to say that that assertion was untrue or that it was true at the time, but is no longer true.  These matters, in my view, throw doubt on the likelihood of the applicant’s return.  A number of other matters have been raised in this regard, but they overlap with the third issue.  And I will turn to that.

19. Will the travel hamper the administration of the estate?  The applicant’s submissions, both written and oral, stress the alleged incongruous position adopted by the trustee.  It was put that the trustee’s preparedness to permit the bankrupt to travel, provided he paid what the parties describe as contribution assessments, sat very poorly with the subsequent refusal of permission to travel.  By way of contrast, the trustee submits that there is no inconsistency.  The first decision was said to involve a balancing of the relevant considerations, which included payment by the bankrupt of over $400,000 in contributions.

20. The refusal, inter alia, reflected further consideration when the bankrupt refused to pay those contributions.  Put shortly, I agree with the trustee. 

21. The next point is that the bankrupt’s absence overseas will inevitably hamper the administration of the estate to some degree.  Such is only common sense.  The administration of the estate of a bankrupt (and that of the applicant is not without complexity) is self-evidently easier if the bankrupt is in Australia and not overseas.  Just one of the many obvious examples of practical difficulty is time zones, but there are all too many obvious other ones.

22. The next point to be noted is that the bankrupt swears he will return and proffers undertakings.  Clearly, this is relevant and important.  But, self-evidently, it is not decisive.  If it were, then the mere sworn word of an applicant in these circumstances would become an indefeasible solitary criterion.  The court is not obliged to accept those undertakings or the sworn evidence. 

23. The trustee makes a number of points in this regard. First, the bankrupt failed on three occasions to provide the trustee with his address. While the bankrupt proffered various reasons from time to time for his failure to keep the trustee informed of his address, he was aware from at least 16 February 2017 of the terms of section 80 of the Act. If one turns to page 1292 of the court book, which is correspondence sent to Mr Bensimon, it relevantly provides:

    Dear Ron,  

    You have advised in your email below that you will only provide me with your new address after I provide you with an undertaking that your new address will not be released to any creditors and I will keep these details in the utmost of confidence.

    Please note, firstly, that section 81 of the Bankruptcy Act 1966 (Cth) imposes upon you a mandatory obligation to advise me of any change in your address in writing.

    Specifically, if, during the bankruptcy, a change occurs in the bankrupt’s name or in the address of the bankrupt’s principal place of residence, the bankrupt must immediately tell the trustee in writing of the change.  Penalty: imprisonment for six months (my emphasis).

    Accordingly, you have a mandatory obligation to provide your address in writing to me immediately.

24. Parliament has made this matter an important one.  The bankrupt’s subsequent conduct – and I refer to court book 504 – suggests an insouciance on his part with compliance with his obligations.  Secondly, it is put that the bankrupt failed to comply promptly with income disclosure requirements.  In this instance, I think that the evidence, which is at court book 505 to 507, is equivocal.  I do not give that matter any weight.

25. Third, it is put that the bankrupt failed to produce documents for public examination.  This is in part at least made out.  I refer to the trustee’s affidavit at court book 509 at paragraph 48. 

26. Fourth, it is put that the bankrupt had failed to pay contribution assessments.  Mr Bensimon says he cannot pay.  But, having seen and heard his evidence, it is clear that he could have paid at least some of the assessments in January 2020.  It is clear, also, that these proposed payments, which the bankrupt assured the trustee from time to time he was going to make, were designed so far as the bankrupt was concerned to enable him to go overseas.  He said this in terms in his evidence.  Once it was clear he would not be permitted to go overseas, the bankrupt did not pay. 

27. Whether he would have been able to pay all of the over $400,000 which, of course, he is presently required by law to do, may be questionable.  But I have no doubt he could have paid some of it and simply decided not to.

28. This brings us to the next consideration, namely the material that has been exhibited to the affidavit of Mr Rambaldi, sworn on 6 March 2020.  I will read the information report at pages 4 and 6:

    1.  Information. 

    During the course of an investigation into alleged breaches of the Bankruptcy Act 1966 by the above, it was discovered that since becoming bankrupt, BENSIMON obtained ten separate loans from Aceben Loan office (pawn shop) during the period 7 March 2017 to 10 April 2019 by pledging jewellery and diamonds. Interest rates on the loans was 30%. BENSIMON signed each loan agreement that he was the legal owner of the pledged goods. On each occasion, he redeemed the jewellery upon repayment of the loans. The below table lists the jewellery that was pledged with listed pledge value.

29. On page 6, under the heading Reporting Officer’s Comments:

    It is possible the bankrupt may still be in possession of the above assets.  Releasing this information to the registered trustee may result in the assets being claimed and realised for the benefit of the bankrupt estate.

30. The bankrupt, of course, denies the assertions made against him, but concedes, very properly, that the trustee will undoubtedly have to investigate.  That is quite clearly correct.  This report raises serious matters.  They may amount even to criminal conduct.  It is possible that there are 347-odd thousand dollars’ worth of assets available.  Physical recovery of those cannot realistically be pressed if Mr Bensimon is overseas. 

31. Further, he will have a far greater incentive to pay some or all of his contribution assessments if they are sustained.  They are, of course, presently under challenge and in dispute, but still lawfully payable.

32. The next matter I should deal with are the undertakings.  These have either been put by Mr Bensimon on oath or through counsel.  I should make it plain I am not making a finding that he is a perjurer.  But, as I said before, that does not means the Court is required to accept his undertakings.  He may mean it and change his mind or he may not be telling the truth.  In my view, it is a matter of the evaluation of the relevant evidence. 

33. Most importantly, the undertakings become, effectively, unenforceable once the bankrupt leaves Australia unless, of course, he were to later elect to return.  But I would point out that if he does breach the undertakings, it will almost certainly be because he intends not to return. 

34. This brings me to my conclusion.  The Court, as I indicated at the start, has a broad discretion.  Taking all the relevant considerations as I have detailed them in this judgment together, it is clear, in my view, that the proper exercise of the discretion that I had is that the trustee’s decision should stand and not be set aside.  I think in formal terms this will only mean that the application brought by Mr Bensimon is dismissed.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Associate: 

Date: 16 March 2020